Mike Bark and Meagan Rutkowski are back to talk about PPP forgiveness, the Employee Retention Tax Credit and everything that you need to know about getting your taxes in order with your dental practice. Visit http://www.bullmoosefinancial.com for more information.
The new PPP Forgiveness form
The first is we still get a lot of questions about whether or not you should be applying for PPP forgiveness at this point. The good news is the new simplified form, for those who took a loan under $150,000, is now out. It is a very simple form to fill out, you're going to put down some information about your loan, you're going to put in some information about how much in wages you're going to be using toward your forgiveness. That's pretty much it. You need to understand that this could be subject to audit at some point, but it's an extremely easy form to fill out. Quite frankly, the vast majority of our clients have loans that are under $150,000. So the application in and of itself is not going to be a hard thing to do. Having said that, we still don't want you to apply for forgiveness. There's no rush to do it right now.
PPP Forgiveness and Employee Retention Tax
One of the positives in this recent stimulus bill that came out was if you took a PPP loan, and the prior law, you weren't able to take the Employee Retention Tax Credit (ERTC). The new Act changed to say, not only can you take the employee retention tax credit proactively, but you can go back in time and if you meet certain requirements, you can take that Employee Retention Tax Credit now by either doing a tentative claim for refund or amending your fourth quarter 941 return. So where that kind of ties together with your PPP forgiveness application is one of the requirements in this law is you cannot use the same wages for PPP forgiveness and the Employee Retention Tax Credit. And you're probably saying, well, that's not a big deal, because we have a 24 week period in which to use our wages up to not only get our PPP forgiveness but get this ERTC. Where we see the potential problem right now is the PPP application only asks you for a dollar amount of wages on it that you want to use toward your forgiveness. It doesn't ask what period you are using those wages from. The issue as I think we see it in a lot of other people out there is if you put an amount of wages down on that particular form, how is that going to coordinate with the Employee Retention Tax Credit? In other words, how are they going to know that you're not double-dipping? I think one of our expectations or one of our hopes, is that they are going to modify that form slightly to indicate specifically what period of time are you using wages from in the PPP forgiveness application. That way as they try to marry the Employee Retention Tax Credit, they'll know that you're using a hunk of wages for your forgiveness, and a different one for your Employee Retention Tax Credit. Everything will go smoothly from that point on.
Employee Retention Tax Credit
Part of the CARES Act was the first round of the PPP stimulus and also the Employee Retention Tax Credit. But at the time, you weren't able to do both. So most of our clients ended up taking all the PPP long because that was guaranteed money. Now we see six months later, they changed it. Now everybody gets to do both. So the way that Employee Retention Tax Credit works is if you had a decline of 50% in a calendar quarter over the prior year, or you were shut down by the government, you are eligible for this credit. The credit is 50% of employee wages paid up to $10,000. So you could potentially get $5,000 per employee for wages paid. The period for the one on the CARES Act for 2020 was wages paid March 31, 2020, through December 31, 2020. So the max you'll get on that one is $5,000 per employee over that period. Now with this recent law that passed at the end of December, there's a second Employee Retention Tax Credit for 2021 wages, and that increases to a max credit of $7,000 per employee per quarter. So that credit will be more substantial. The requirements to meet that, are a little bit easier to meet as well. A good percentage of our clients meet the 50% decline in gross receipts for the second quarter because you guys were not in operations due to recommendations from the government. Some of our clients were seeing emergency patients so we're not sure if that is going to meet the requirement of fully or partially suspended operations. The slam dunk is a 50% decline. Then the next step is we would look at people who were fully or partially shut down.
To learn more about the Employee Retention Tax Credit and how you can apply for PPP Forgiveness, contact Bull Moose Financial at (414) 759-9629, or visit their website.
